Self-employment

The situation has changed, however. Nowadays there are many opportunities for anyone who wants to be his/her own boss.

Experience from right across the world, however, has taught us that seven in every ten (70 %) of newly established business concerns fail within the first year!

Some economic principles

• Primitive communities

People have inhabited the earth for a very long time. For most of their existence, they have survived together in small groups of 20 – 30 persons. This is because few people survived the cold and dangerous circumstances of early times. The groups were like extended families and they shared almost everything they possessed. The leader of each group determined what each of the other members of the group had to do. This largely stifled all own initiative.

• Right of ownership

In time, however, certain communities came to grow in numbers and became wealthy.

Why did only some communities begin to develop after such an extended period of primitive life?

Some historians ascribe this to the principle of right of ownership. In certain communities, individuals were encouraged to own private property and thereby became better off. As soon as such a person has his or her own property, he or she is the owner of such property and is able to decide how to dispose of it without needing permission from anyone else in the group.

It soon became evident that owning property affected the attitudes of the owners.

Activity 2:

To choose the correct statement and motivate your choice

[lo 1.1]

Select the correct statement:

As soon as people are allowed to retain what they earn or produce, they generally are willing to work harder.

As soon as people are allowed to retain what they earn or produce, they generally become lazy and unwilling to work harder.

What is the reason for this situation?

How do you think the right of private ownership will affect the attitude of most people towards a new opportunity or business?

Activity 3:

To find a solution for the typical problems of bartering

[lo 1.3]

• The price system

The various communities quickly realised that knowledge and products within their own communities did not comprise all the knowledge and products that were available and that different communities needed one another for a wider range of products. This introduced bartering . But it often was impossible to exchange one article for another in the barter system. A cow obviously could not be exchanged for a bar of soap, or a loaf of bread, or fruit, even! And you could not divide up a cow!

Can you suggest a solution to this problem?

Initially, people considered the use of commodities such as salt, which could be broken up into smaller pieces/quantities and used in bartering for smaller quantities of other products. Soon the value of silver also became apparent – especially as it was always in demand as far as everyone was concerned.

These commodities used for barter became known as money . In this way, a price system was developed. The price paid for an article gave the producer an indication of the needs of the consumers. Those in the textile trade, for instance, knew that there was a great demand for textile fabrics by noting that the prices paid for textiles were increasing. The price obtained for an article therefore indicated what producers needed to produce in greater or smaller quantities.